Orban tightens its grip on the telecommunications sector as Vodafone sells a Hungarian unit

Shoppers wear protective face masks outside a Vodafone store in a downtown mall ahead of Black Friday amid the coronavirus disease (COVID-19) pandemic in the Cairo suburb of Maadi, Egypt November 26, 2020 REUTERS/Amr Abdallah Dalsh/ File Photo

LONDON/BUDAPEST, Aug 22 (Reuters) – Britain’s Vodafone (VOD.L) will sell its Hungarian business for 715 billion forints ($1.8 billion) in cash to local IT company 4iG and the Hungarian state, thus consolidating the hold of Prime Minister Viktor Orban. government on the telecommunications sector.

Orban, in power since 2010, has extended the influence of his nationalist government into areas such as energy, banking and the media, which he sees as strategic, and has long harbored plans to tighten his grip on the world. telecom sector.

The deal – which does not include Vodafone’s shared services business, VOIS – is expected to create Hungary’s second-largest telecom operator. 4iG will hold a majority stake of 51% while the Hungarian state will hold 49%.

“The combination of 4iG and Vodafone is an important step towards creating a Hungarian national champion in the (information and communications technology) sector,” 4iG said in a statement on Monday.

The British mobile and broadband group said it had agreed non-binding terms with the buyers, 4iG (IGNY.BU) and state-owned Corvinus Zrt.

In a statement, Economic Development Minister Marton Nagy noted the government’s previous successes in building ownership in other strategically important sectors.

“Now there is a chance for a Hungarian company, with state participation, to also become an important player in the telecommunications market,” he said.

4iG has grown exponentially in recent years, becoming the dominant ICT group in Hungary through acquisitions, lucrative government contracts and the growth of its existing operations.

CEO and largest shareholder Gellert Jaszai told Reuters in 2019 that 4iG planned to grow through debt-fueled acquisitions in Central Europe.

Businessmen close to Hungary’s ruling Fidesz party have come to dominate several industries as the government, which was re-elected for a fourth consecutive term in April, expands its direct involvement in a number of key sectors.

“The Hungarian government has a clear strategy to build a Hungarian national champion in the (information and communications technology) sector,” Vodafone chief executive Nick Read said in a statement.

The sale should be finalized at the end of 2022.

4iG shares jumped 9.25% on Monday to trade at 850 forints on the Budapest stock exchange at 08:43 GMT.

($1 = 404.0500 forints)

Reporting by Pushkala Aripaka in Bengaluru and Sachin Ravikumar in London; Additional reporting by Krisztina Than; Editing by Rashmi Aich and Kirsten Donovan

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